Advance fee frauds ask investors to pay a fee up front—in advance of receiving any proceeds, money, stock, or warrants—in order for the deal to go through. The advance payment may be described as a fee, tax, commission, or incidental expense that will be repaid later.

Some advance fee schemes target investors who already purchased underperforming securities and will offer to sell those securities if an advance fee is paid—or target investors who have already lost money in investment schemes. Fraudsters often direct investors to wire advance fees to escrow agents or lawyers to give investors comfort and to lend an air of legitimacy to their schemes. Fraudsters may also try to fool investors with official-sounding websites and e-mail addresses.

Advance fee frauds may involve the sale of products or services, the offering of investments, lottery winnings, found money, or many other so-called opportunities. Fraudsters carrying out advance fee schemes may:

• Offer common financial instruments such as bank guarantees, old government or corporate bonds, medium or long term notes, stand-by letters of credit, blocked funds programs, fresh cut or seasoned paper, and proofs of funds;

• Offer to find financing arrangements for clients who pay a finder’s fee in advance; or

• Pose as legitimate U.S. brokers or firms and offer to help investors recover their stock market losses by exchanging worthless stock—but requiring investors to pay an upfront security deposit or post an insurance or performance bond.

In New Hampshire, advance fee frauds are illegal and are considered a form of financial fraud or theft by deception. These schemes violate both state and federal laws. Under New Hampshire state statutes, specifically RSA 638:4, Theft by Deception, it is unlawful to obtain property from another by purposely creating or reinforcing a false impression. Additionally, the New Hampshire Bureau of Securities Regulation oversees the securities industry in the state and enforces laws against securities fraud, which would include fraudulent investment schemes requiring advance fees. At the federal level, the Securities and Exchange Commission (SEC) and the Federal Trade Commission (FTC) also combat advance fee frauds, with the SEC focusing on securities-related fraud and the FTC addressing a broader range of advance fee scams. Victims of such frauds in New Hampshire can report to the New Hampshire Bureau of Securities Regulation, the New Hampshire Attorney General's Consumer Protection and Antitrust Bureau, or federal agencies like the SEC or FTC. It is advisable for individuals to consult with an attorney if they suspect they have been targeted by an advance fee scheme.